Bonuses may be becoming smaller, more convoluted, deferred and subject to clawback, but the majority of large investment banks are sticking to their traditional payment schedule.
We’re in the midst of bonus season – most US firms have announced or paid this year’s variable compensation – and despite heavy fines from Libor manipulation and payment protection insurance (PPI) claims hanging over European institutions, onerous regulation and complicated malus arrangements (or potential for performance penalisation), payment dates are staying pretty much the same.
“The decisions on what to pay have been more difficult at banks subject to various events,” said Jon Terry, partner in the reward and compensation practice at PwC. “While the size of the bonuses may change this year, the traditional time to announce and pay them remaining in line with previous years."
Generally, this means that Canadian banks announce in December, US banks in January, UK banks in February, European banks on the continent in February or March and Asian or Australasian firms in May and then pay the bonuses shortly afterwards.
It’s not all straightforward this year. For instance, despite rumours of delays in bonus payments at UBS because of complications over its core and non-core businesses and a desire to avoid the 50% UK income tax for those earning over £150k, sources within the bank say bonuses will be paid in March as usual. UBS declined to comment.
What’s more, RBS, already severely limiting its bonus payments, is clawing back 15% (or around £100m) in bonuses from previous years for senior executives because of Libor fines. Meanwhile, Credit Suisse is reported to be paying senior executives in cash that can be clawed back over the next three years.
All that suggests that fewer people will quickly change jobs this year after bonus time. “Post-bonus movement will be limited this year, but despite the muted job market there’s always demand for highly-qualified revenue generators,” said Terry. “Clawback provisions, as well as the 2012 bonus figure, will have an effect on people’s decisions to stay or go.”
Below is a breakdown of this year’s announcement and payment dates, based on conversations with recruiters and bankers. RBS confirmed its bonus schedule and HSBC verified its payment date. Other firms, however, either declined to comment or didn’t return requests for comment. Where the payment date is the end of a particular month, this refers to the regular payroll at the bank in question.